Business owners are generally very good at planning, and for many that includes scenario planning – asking those ‘What if …?’ questions and putting in place a contingency plan to be triggered should that situation ever arise, or taking action in advance that would allow a situation to be dealt with.
Video of astronaut Chris Hadfield playing ‘Space Oddity’ while floating around the International Space Station went viral some years back. When he was safely back on planet earth, Chris was going to an Elton John concert and knew he would meet the musician beforehand. He thought to himself, what if … Elton John invites me on stage to perform ‘Rocket Man’ with him?
It wasn’t likely, but it was possible, and it wasn’t a song he knew, so he made a point of learning it. As it turned out, they didn’t duet together – but had Chris been asked, he would have been ready. He had taken action in advance.
Scenario planning is especially valuable in that it addresses situations that are possible but not definite. Add to that the fact such events are often stressful – what if … I lose my two biggest customers? What if … a key member of staff walks out? What if … I had an accident that meant I was disabled for a month, three months, or even longer?
Let’s take that latter one; if something did happen that took you out of the picture for a period of time, or had life-changing implications, how would you cope? How would your family manage? What would happen to your business?
Being prepared for that possibility can take an amount of fear and stress out a situation that is likely to be fraught with both of those things. Here are our recommendations.
Taking care of you and your family
There are three types of insurance you should have.
Most people don’t have sufficient funds to cover the effects of the kind of accident we’re talking about here, and yet it’s relatively inexpensive to secure insurance cover and remove any concerns for you and your family.
In the event of an accident, you can insure yourself for a percentage of your lost income until you return to work. You can choose a deferred payment period of say one or three months. Premiums are relatively inexpensive and a must for any business owner – you can be confident that things like the mortgage, car loans and school fees are all covered.
Private hospital care
If you need medical assistance this insurance will ensure you go straight to the top of the waiting list. You will be treated privately and, much more importantly, promptly!
It’s possible to insure yourself against certain disabling illnesses, including, for example, cancer and heart problems. If you are diagnosed with such an illness and can’t return to work, you might be able to insure for a lump sum on diagnosis. This should help you through treatment and hopefully recovery.
It’s a good idea to see what protections exist in your mortgage, too – there can be more than life insurance attached. It might be that on diagnosis of a serious illness the mortgage is automatically paid off, which is clearly a huge benefit.
Taking care of your business
This is something you can start dealing with now: make sure your business can operate without you. It’s a good idea to do that anyway, first because if all decisions have to go through you, you could be holding things back, and secondly because if you ever come to sell – and if the scenario we’re talking about should happen, you might want to – the business will be more valuable if it operates without you.
Here’s what we recommend to help keep the wheels turning should you not be there for a period of time.
Set up systems
If tasks are systemised and standard operating procedures (SOPs) are in place, then if you or any key staff members are absent, there can be continuity of operations and service delivery. In theory, anyone should be able to operate the systems or follow the SOP.
Take out insurance
We talked above about personal insurance; key person insurance for your business is also a wise investment.
Being prepared is always good
It’s not definite that anything like this will happen. It’s probably not even likely, especially if you don’t indulge in extreme sports. But it’s possible. And by taking steps now, asking those ‘what if …?’ questions in a calm atmosphere, you can be prepared if something does happen.
We can help
Mullen Stoker’s service is about more than just accountancy – it’s an all-round business support service. Put us to the test; call today and find out how we can help you protect your interests from the unforeseen!